Dems' Dubious Ethics Tactics the Last Straw?

Donald Lambro

8/4/2010 9:59:37 AM - Donald Lambro

WASHINGTON -- Two prominent Democrats are facing trial in the House on serious ethics charges less than three months before the voters go to the polls to deliver their midterm verdict.

Both involve severe abuses of power, but one more so than the other as it is entangled in the subprime mortgage debacle that triggered a two-year recession and led to hundreds of billions of dollars in bank bailouts and countless home foreclosures.

New York Rep. Charles Rangel, the once-powerful chairman of the tax-writing House Ways and Means Committee, was forced to step down as a result of 13 ethics charges involving failure to pay taxes, disclose finances, improper political use of a rent-controlled office in New York, and use of his public office to seek millions of dollars in donations from lobbyists and corporations to establish the Charles B. Rangel Center for Public Service at the City College of New York.

In Rangel's case, the House Committee on Standards of Official Conduct, known as the ethics committee, has recommended that he be given a "reprimand," the mildest punishment possible. But Rep. Maxine Waters of California, the fiery member of the Congressional Black Caucus, could face a far more severe punishment for seeking a taxpayer bailout for a Boston-based bank, OneUnited, in which her husband, Sidney Williams, served on the board of directors and owned up to $750,000 in stock.

The ethics panel that has been investigating Waters released an 80-page report written last August by the quasi-independent Office of Congressional Ethics that concluded she broke the conflict of interest rule that forbids members from using their influence as a member of Congress for personal financial gain.

OneUnited was in trouble after having lost $50 million in high-risk investments in subprime-backed stocks at federal mortgage giants Fannie Mae and Freddie Mac. At one point, it was seeking nearly $100 million in bailouts from the U.S. Treasury to keep itself afloat.

Federal investigators said the bank had used poor documentation and lending standards, and gave top executives excessive pay and perks that included the use of a $6.4 million beachfront mansion in Santa Monica.

The ethics investigation found that Waters went to then-Treasury Secretary Henry M. Paulson Jr., asking him to meet with OneUnited executives.

Paulson told investigators later that he believed he was meeting with many minority bankers represented by the National Bankers Association, and was surprised to learn that only OneUnited executives attended. The investigation's preliminary report said "the discussion at the meeting centered on a single bank -- OneUnited."

According to the 79-page report by the Office of Congressional Ethics, Waters initially had doubts about the ethical propriety of her action and went to House Banking Committee Chairman Barney Frank to get his advice.

"Waters told (Frank) that she was in a predicament because her husband had been involved in the bank, but 'OneUnited people' were coming to her for help," the report said. The Massachusetts Democrat told her to "Stay out of it," he told investigators.

Waters insists she did nothing wrong by using her influence to set up the meeting with Treasury officials to obtain funding from the Troubled Assets Relief Program (TARP) that eventually handed OneUnited a check for $12.1 million.

But clearly she used her influence to come to the aid of a bank in which she and her husband have a big financial stake -- an act that the House's conflict of interest rule clearly forbids.

Rangel's many ethical transgressions are bad enough and led the ethics committee to conclude that he broke the "public trust." He, too, said he hadn't done anything improper, and that he had amended House financial disclosure reports he neglected to fill out correctly, paid overdue taxes, and said other members had raised money for centers named after them, as well.

Waters' abuse of her powers and influence as a House member to obtain special treatment for OneUnited bank is arguably worse. "This sure has an unethical whiff to it," The Washington Post said in an editorial Tuesday in a classic bit of understatement.

Both ethics scandals come at a time when public disapproval of the Democratic Congress is at an all-time high. More than 80 House seats are in play in November -- mostly held by Democrats -- and Republicans need only 39 of them to take control of the now-aptly named "lower chamber."

But let's face it, this election is going to be a midterm referendum on the Obama administration and its handling of a jobless recovery, which remains weak and mediocre, and the legislative excesses of the Democratic Congress, i.e., health care reform, the budget deficit, business regulations and plans to raise taxes in a weak economy at the end of this year.

But it will also be about ethics and honesty in the Capitol, and the trials of Rangel and Waters will give voters two additional reasons to conclude that the Democrats are not hosting "the most ethical Congress in history."